For the last two years, South Africa’s hotel sector has enjoyed double-digit growth in Revenue per Available Room (RevPAR), as tourists flock to the increasingly popular holiday destination.
Cape Town, in the Western Cape has emerged as the most popular city in South Africa for new hotel investment. According to reports there are currently 11 hotel projects in the pipeline, eight are well-advanced and three are at a feasibility stage.
The newly developed and pipeline hotel projects are scheduled to open within the next four years, creating a collective investment in excess of ZAR 3.5bn and in excess of 2,000 jobs.
The Western Cape’s hotel sector has outperformed every other province and recorded a phenomenal RevPAR growth of 19.2% for the first nine months this year compared to the same period last year.
Earlier in 2014 the Protea Hotel Group was acquired by Marriott which sparked a surge in foreign direct hotel investment focussing predominantly on the Western Cape and Johannesburg, with investors from the US, China and Middle East leading the charge.
It is not just foreign investors seeking value in the Western Cape. South African demand for property in the region is increasing largely on the back of a strong performing market together with a positive outlook for the hospitality industry within the entire province.
International demand for investment is increasing as a result of a favourable exchange rate with Europe as a key market, coupled with a sharp increase in enquiries and investment out of China.
Market leaders Pam Golding Lodges and Guesthouses (PGL&G) has itself facilitated 56 foreign direct investment transactions with a total value of just under ZAR 0.5bn.
It is estimated that more than 500 people have been directly employed as a result of these transactions and PGL&G are seeking to enhance these figures further through the launch of the Pam Golding Hospitality Partners initiative which is set to integrate a ‘one stop’ service concept including legal, accounting, tax, work permit, immigration and insurance advice.
The Group is set to become the premium consultancy firm within South Africa’s hotel industry, extending into Africa over the last year where it provided consulting on feasibility and market studies for the hospitality sector in the Sub-Saharan region.
The outlook for South Africa’s tourism industry is extremely bright, attracting considerable interest from property investors in the most popular cities such as Cape Town and Johannesburg. The expanding labour market in areas where hotel development is concentrated presents sound opportunities for achieving strong rental yields and consistent tenancies.
Source: Property show rooms